Katrina to boost some home values

Neighborhoods that didn't experience flooding after Hurricane Katrina will likely see their home values climb as residents looking to start over seek higher ground, metro area real estate brokers said.

Property values in West Jefferson, River Ridge, Kenner, Mandeville (Katrina photos: Back to Mandeville), Covington, and Slidell - all of which emerged from the storm relatively unscathed - are expected to jump 10 to 15 percent.

"In those areas there is just going to be substantial premiums being paid" for housing, said Wade Ragas, recently retired professor of finance at the University of New Orleans and former head of its Real Estate Market Data Center.
Ragas said he expects to see strong demand and higher prices in St. Charles Parish.

Ragas and Arthur Sterbcow, president of Latter & Blum Realtor Inc., also expect River Ridge in Jefferson Parish and Uptown, two areas where flooding was minimal to non-existent, to see strong demand and resulting price increases.

"In those areas there is just going to be substantial premiums being paid" for housing, Ragas said, though he was hesitant to put a percentage increase on every area. Specific data on post-Katrina real estate sales is not available.

West Jefferson, which also saw little if any flooding, will be another high-demand area for housing. But the incomplete levee protection system will keep prices in that area from climbing too far.

"The only reason the West Bank didn't flood is because of the path the storm took, " Ragas said. He said if the federal government agrees to spend the estimated $70 million needed to complete the levee protection system, especially along the Harvey Canal, home prices in Harvey, Marrero and Terrytown could jump higher.

But the Katrina-related flooding in Old Metairie will likely leave some suburban buyers with a psychological inhibition about moving too close to the city.

"Buyers are more frightened about being closer because of the flooding in Metairie, " Ragas said.

Kenneth Levy, a Latter & Blum broker in the Slidell area, said the inventory of available homes is far short of demand, and that that demand will only soar once repairs begin on damaged homes.

Some contractors are finding innovative ways of getting quick starts on repairs they are scheduled to do. They are offering the owners of some damaged but inhabitable homes the chance to get their dwellings repaired for free, as long as the workmen are allowed to live in the home they are working on, Levy said.

"That's one of the few win-wins'' in the market, '' Levy said.

The already bustling Baton Rouge real estate market is also experiencing a surge of activity as Hurricane Katrina evacuees in need of housing snap up properties.

When multiple offers are made on Baton Rouge properties, New Orleanians are making "outrageous" counter offers, said Nancy Abney, an owner/broker with Prudential Unlimited Properties, which was recently bought by Prudential Gardner Realtors inc. of New Orleans.

Sterbcow told of one New Orleans businessman who looked at a $600,000 Baton Rouge home as a place to relocate employees and crank up business. After hearing that a second offer on the home was imminent, the businessman "doubled (his offer) and paid cash, " Sterbcow said.

The flurry of activity has resulted in some complaints of price gouging in the Baton Rouge market. But the state attorney general's office has said that a state law that prohibits price gouging during disasters does not address home prices.

"It's an unbelievable market, " said Barbara Dixon of Dixon Realty Inc. of Baton Rouge. "I've had sellers call and say they want to double the asking rice for their homes. I'm sure I'm going to make a lot of enemies, but that just shouldn't be. I want business but I don't want bad business. I won't take their listing."

In Baton Rouge, Ragas estimates that the premium being paid on single-family homes in Baton Rouge is probably about 30 percent. "That's the typical premium being paid, and that's a mistake for many buyers, '' Ragas said.

Terry Moore, a broker whose territory includes the Mandeville-Covington area, said the scope of the metro area reconstruction effort will most assuredly result in shortages - and price run-ups - in key building materials.

As a result, home values will not only rise in southeast Louisiana, but across the country.

"Think of it as the ripples caused by a pebble thrown into a pond. They just haven't hit the shore yet, '' Moore said.